REDLANDS – The success of one state proposition means half a million dollars will stay in Redlands this fiscal year.

Sixty-one percent of voters supported Proposition 22, telling the state to stop borrowing or taking funds from local governments. This means the state can no longer seize redevelopment money from Redlands or other cities as it did in May.

“The state took $2.3 million in the last fiscal year,” said Community Development Director Oscar Orci. “It was slated they were going to take approximately half a million this fiscal year.”

In May, Sacramento Superior Court Judge Lloyd Connelly ruled local redevelopment agencies must abide by a law passed in 2009 giving the state the right to take RDA funds to help balance its budget. He ruled the state raid of RDA funds is legal, as that money would be redirected to schools within RDA areas.

Sherryl Avitabile, assistant superintendent of business services for the Redlands Unified School District, said the state used the RDA funds to fill its own revenue shortages so it could fund schools. In the future, they will have to find new ways to fund education or it may suffer.

“The state is either going to have to generate new revenues to make up for that loss (of RDA funds) or find places to cut,” Avitabile said.

Proposition 98 requires a minimum percentage of the state budget to be spent on education. Had it not been suspended, a minimum of 40 percent of California’s General Fund spending would be mandated to be spent on education.

The amount the Redlands RDA paid the state in May represents 37 percent of the $6.2million it collected in tax increment funds in the 2009-10 fiscal year.

“It significantly impacted everything we’re doing here,” Orci said. “There are multiple efforts we had to hold off on because of this, from capital projects to funding efforts for business recruitment. It really has limited what we were able to do.”

Now, the state will be prohibited from redirecting redevelopment property tax revenues and from enacting laws requiring the agencies to shift their funds to other agencies or schools. It also prevents the state from borrowing or taking other funds from local municipalities.

As a result, about $1 billion will be unavailable to the state’s General Fund this fiscal year. Orci said the city had the $500,000 it expected to pay the state set aside and said the proposition’s success is a good thing for Redlands.

“It’s excellent not only for the agency but the other areas in Redlands it may affect,” Orci said. “It will allow us to rely on that money perhaps otherwise we would not be counting on.”

Municipal Utilities and Engineering Director Rosemary Hoerning said one such project specifically impacted by the seizing of RDA funds is the restoration of Ed Hales Park, the third phase of the city’s Downtown Reinvestment Program.

At the city’s ribbon-cutting ceremony for the program at the end of October, Hoerning said the start of the third phase might be delayed because of the drop in RDA funds, which are helping finance the recent and upcoming downtown improvements.

With Prop 22’s passage, Orci said the delay may be shorter than anticipated as funds are not in jeopardy of being seized.